Shopping for Data Deals: 4 Steps to Improving the Retail Relationship

Potential shopping transactions may look promising based on window displays, but without a little shared control behind the racks, the virtual data cycle is at risk of becoming a vicious one.

This thought occurred to me while reading a recent New York Times story that explores customer data use. Citing Apple CEO Tim Cook and recent survey results by the Annenberg School for Communication, the story reports that many Americans believe the trade-off of their data for personalized services, offers or discounts is a lopsided deal. More than half of those surveyed – 55% – disagreed or strongly disagreed that “it’s O.K. if a store where I shop uses information it has about me to create a picture of me that improves the services they provide for me.”

Which brings to mind both virtuous and vicious circles. I long believed that data well used – meaning responsibly used – would produce for retailers and consumers a virtuous cycle. This is a pattern in which both parties mutually benefit from the information: consumers receive relevant offers they want and can use, and retailers are rewarded with the sales.

But too many companies are failing to deliver, and that shortcoming is winding us back to that same point in the road where many merchants, and consumers, are forced to reconsider the data-for-reward value equation. Blame it on new technologies, hand-grafted smartphones and/or social media; it doesn’t matter. What matters is that we are at this same fork in the road.

People are as familiar with the ways in which companies collect their data as they are with the patterns of seasonal sales. The practice is a given. The onus is on retailers and marketers to continually provide their shoppers with credible reasons to share, or risk them walking by the window.

Some of the simplest tactics can be compelling. Clarity, for example, is an increasingly rare commodity in the data value equation, as evidenced in the Annenberg survey results. At the risk of sounding self-promotional, I would point out that loyalty programs are a proven method for being transparent, because the consumer sees the transactional value directly. The more straightforward the program, the better the customer will operate the advantage of participating: 10 points for every $5 spent, for example, or five points for sharing a link on Facebook.

I am not alone in this thinking. Mike Zaneis, the chief counsel for the Interactive Advertising Bureau, told the Times, “People are always willing to trade privacy and information when they see the direct value of sharing that information.”

Whether that value is delivered through a loyalty program or other means, once a company agrees to use a customer’s information, it is responsible for treating that data with respect and care. Getting that trust requires a disarmingly straightforward promise and a proven record. I break down the responsible use of data as such:

Be transparent and reasonable: The younger the target consumer, the more important it is for an organization to be direct, clear and genuine in terms of what data it collects and why. But even mature consumers view tiny type as suspicious type, so companies should avoid it. Instead, they should explain their intentions for the data in straightforward language and spell out what’s to be gained by the customer. (“We collect your name, age and address. We combine what we know with what you buy to send offers we hope you like. If you do not like them, tell us and we will try to fix it.”) People are more likely to engage with companies that speak their language.

Give consumers a choice: This gets to the opt-in argument many advocates, including Apple’s Cook, support. Permission is a crucial component of any honored contract and a retail strategy that is built on the value-based exchange of data is essentially just that – a contract. More important, it is elemental to establishing long-term customer trust. Companies should give their customers the opportunity to choose how to share their personal information. LoyaltyOne’s AIR MILES Reward Program is permission based, and less than 1% members have opted out to receiving marketing communications since the program began in 1992.

Don’t be a pest: Consumers are overwhelmed by too much information, usually because their name, contact information and permission for use have been abused by others. By making sure its texts, emails and other communications are not too frequent and that they are relevant to the customer’s needs, a company can stand apart from its competitors. If the company does not know what resonates, it can run a series of A/B tests to determine which promotional communications resonate most with consumers, and then be more selective about what to roll out to the entire base

Give to get: Smart companies are dedicated to creating real value for their customers as well as for themselves, across all transactional touch points. However, value should not be limited to merely the product, cash, points or coupons. It is derived from creating something more powerful, which is relevance, because consumers are more likely to respond to communications with which they could relate. The more a company’s communications and offers resonate, the better the customer experience and thus, customer engagement. With this powerful duo, a brand is positioned to enchant the customer with offers.

Respect, protect the data: It’s pretty simple: Retailers should use the data they collect only as promised and retain it only as long as needed. This means never crossing the creepy line into very personal areas such as health, sex, personal finances or questions about children. Once the data is deemed unnecessary for its agreed-up purpose, it should be destroyed with care – always.

If retailers continue to fall short on the need to deliver, with interest, on the value of the data provided them, they’ll be facing worse than a vicious cycle. They could be circling the drain.

This guest post came courtesy of Bryan Pearson. Bryan is the author of The Loyalty Leap For B2B and is president and CEO of the LoyaltyOne consultancy firm.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.